Mexico recorded its lowest-ever bond coupon in Thursday’s deal, but other borrowers are yet to be tempted
Category: Regions
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Peru expected to hold rates
Analysts expect Peru’s central bank to hold rates at 4% when it meets today, although one says a rate cut is possible. The bank held rates in December after a surprise cut in November from 4.25%. Before that, rates had been stable for more than two years. Peru’s reported lower-than-expected inflation in December, bringing the annual rate to 2.86% for 2013, inside the central bank’s 1% to 3% target. That gives the central bank some freedom, says the analyst. The central bank revised down its 2013 GDP growth expectations, to 5.1%, from 5.5%, in December. The deceleration could spur a rate cut, but waiting would give the economy an opportunity to stabilize, the analyst said.
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Colombia base rate held at 3.25%
Colombia’s central banks held the country’s benchmark interest rate at 3.25% at its December meeting. The bank says it took into account better than expected signs of recovery in the global economy, as well as the US’s reduction in monetary stimulus. Colombian GDP growth was stronger than expected in the third quarter and inflation was lower than forecast.
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Banco de Bogota Completes Follow-on
Banco de Bogota has completed the sale period for a COP1.3trn ($670m) equity follow-on, it says, upsizing to the maximum amount. The bank sold 20.6m shares at a COP63,000 per-share price set at the beginning of the sale period. The shares closed at COP66,780 Thursday. Banco de Bogota managed the sale itself. Parent Grupo Aval agreed to pay $646m for BBVA Panama in July, and in June Banco de Bogota agreed to buy Grupo Financiero Reformador in Guatemala through the Credomatic subsidiary for $411m. Aval is itself holding a COP2.41trn follow-on open through January 9, with some of the funds going toward its participation in Banco de Bogota’s sale.
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IDB Dishes Out Loans
The Inter-American Development Bank (IDB) has agreed to loan Mexico $450m as part of a $562.5m drinking water and sanitation program, it says. The bullet 2021 facility has a 7.5-year grace period and an undisclosed Libor-based interest rate, the IDB says. Local funding will cover the other $112.5m. The multilateral is also lending El Salvador’s government $115m to help improve highways, it says. The 25-year loan has a 5.5-year grace period and undisclosed Libor-based interest rate. The IDB says the enhancements to the Mesoamerican Pacific Corridor will add to regional trade and cut travel times and delays. Ecuador is to also receive IDB funds, with a $60m, 25-year loan with a 12.5-year grace period and undisclosed Libor-based interest rate directed at its rural road network. The government adds $34.6m to the funds, which target 143km of roads. Finally, Brazil’s Parana state has been approved for a $60m loan with a 25-year term, 5.5-year grace period and undisclosed Libor-based interest rate. The funds aim to help low-income families in 156 municipalities.
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Oaxaca Raises Half of Target
The Mexican state of Oaxaca has priced a MXP1.2bn ($92m) domestic bond, according to people familiar with the transaction, raising half of its expected target. The 15-year bond priced at 9.00%, or Mbono+285bp, wide to 8.50%-area price talk. The issuer received 1.2x demand. The remaining MXP1.2bn will be provided to the Mexican state through a bank credit line with government development bank Banobras. The 1.5% guarantee from funds received by the federal government and 25% from monthly government federal transfers to states and municipalities were reduced to 0.77% and 12.77%, respectively. Oaxaca is using proceeds for public investment. Banamex, Interacciones and Santander managed the deal, rated A minus on a national scale, with Cofinsa as structuring agent.
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Reforms Mean Upgrade for Mexico
S&P has raised Mexico’s credit rating to BBB+ from BBB, it says, following the passage of energy reform legislation. “The passage of a landmark energy reform, supported by some changes in the fiscal framework, bolsters Mexico’s growth prospects and fiscal flexibility in the medium term,” the agency says. The opening of the country’s oil and electricity sectors has the ability to attract “significant” investment. The lead time needed to realize increased investment in Mexico’s oil sector does not suggest any immediate boost to investment, S&P notes, except for that associated with improved investor sentiment. It expects 3.0% GDP growth in 2014, up from 1.2% in 2013, and 3.5% in 2015. The outlook is stable. Mexico is now rated BBB+/BBB+/Baa1.
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Moody’s Lowers Peruvian Retailer
Moody’s has downgraded Maestro Peru to Ba3 from Ba2, it says. The action is based on the home improvement retailer’s continued high leverage and increasingly pressured liquidity in 2013, as the company executes a “relatively aggressive” expansion plan. Same-store sales and overall Ebitda growth were weaker than expected. The agency finds Maestro’s 5.8x total debt-to-Ebitda level as high for its category. Supporting the rating are the favorable macroeconomic conditions in Peru, a robust housing market and increasing penetration of the larger retail chains in a highly fragmented market, Moody’s says. The outlook is negative. Maestro is now rated Ba3/B+.
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CFR African Vote Pushed to January
Shareholders of South Africa’s Adcock Ingram have postponed a vote on CFR Pharmaceuticals’ takeover offer to January from this week, the drugmaker says. The move follows a recent increase of the Chilean’s cash and stock takeover offer by 1.6% to ZAR12.8bn ($1.23bn). The offer was up from ZAR12.6bn. CFR’s bid comes at ZAR74.50 per share, up from ZAR73.51, and contemplates ZAR6.4bn-ZAR8.2bn in cash, and ZAR4.6bn-ZAR6.3bn in CFR shares. CFR claimed the support of shareholders holding 53% of Adcock as of last month. The acquirer needs to reach 75% for success, and a pension fund holding 19% has come out against the deal. CFR says it has a $600m bridge loan ready to go from BBVA, Santander Chile, Bancolombia and Bank of America. Credit Suisse is advising CFR, with IMTrust providing an evaluation of Adcock shares. Deutsche Bank is advising Adcock, with JPMorgan providing a fairness opinion. The deal is expected to generate revenue and cost synergies of up to $440m, would see Adcock delisted from Johannesburg, where CFR would have a secondary listing. In addition to the bridge funds, CFR is preparing a $750m equity capital raise.
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Mexican Completes Gas Project Loan
Mexico’s Gasoductos de Chihuahua has closed syndication of a $500m, 13.5-year project finance loan paying Libor+200bp, according to people familiar with the process. Bookrunners Bank of Tokyo-Mitsubishi and BBVA added and Mizuho and NordLB as MLAs, at $73.5m each. The borrower, an operator of pipelines and other midstream assets in Northern Mexico, is raising funds to use in the construction of the Los Ramones I natural gas pipeline.